Media Sector Gets a Boost in Fiscal Update

The federal government unveiled a $595-million package over five years to help Canada’s media sector, including measures to facilitate fundraising by non-profit news organizations and tax breaks to fund the production of original content.

In addition, the government is proposing a temporary 15 per cent tax credit for Canadians on online subscriptions to some media outlets.

An independent panel comprised of members of the news and journalism industry will flesh out the application of the moves announced in Wednesday’s fall economic statement. In particular, the group will decide which journalism jobs and which news organizations are eligible for the new funding.

The federal government said it wants to assist Canada’s news industry, which is struggling to adapt to new media consumption habits and the migration of advertisers toward foreign digital platforms. In a speech in the House, Finance Minister Bill Morneau said the goal is to “protect the vital role that independent news media play in our democracy and in our communities.”

The issue of federal funding for news organizations has divided Canada’s media community and sparked heated political debate, with the Conservatives arguing new funding to the media should not be awarded in an election year.

“The media should be independent from the government,” Conservative MP Pierre Poilievre said. “We should not have a situation where the government picks a panel that then decides who gets to report the news. That is very dangerous.”

The funding will start flowing slowly, starting with planned spending of $45-million next year before ramping up to $165-million a year by 2023.

The costliest new measure is a refundable tax credit to support “labour costs associated with producing original news content” that will be offered to both for-profit and non-profit news organizations. The tax credit will take effect on Jan. 1, 2019.

In terms of fundraising, the federal government will allow “non-profit journalism organizations that produce a wide variety of news and information of interest to Canadians” to get charitable status and issue official receipts to donors. This would encourage philanthropic support for non-profit organizations by allowing donors to deduct approximately half of the value of their donations from their income taxes. In addition, charities could also start giving money to these non-profit organizations.

The government said the package will aim to help “trusted” news organizations, but will leave it to the media industry to define the application of the new initiatives.

After being briefed on the package, representatives of some major news organizations said the government has found innovative ways to support the media without interfering in the reporting process. Along with other media organizations, Globe and Mail publisher Phillip Crawley said the newspaper is set to launch a foundation that will receive donations to support specific forms of journalism.

“At a time when some of the traditional sources of revenue are fading, like print advertising, it is important to tap into a new funding source like philanthropic funding,” he said. “It could be millions of dollars.”

Regarding the tax breaks for employees, he said the key will be defining eligibility criteria.

“It depends on the industry handling this responsibly,” Mr. Crawley said. “The definition of what constitutes a journalist is important.”

Brian Myles, the director of Montreal-based Le Devoir, said the proposals will help attract donations and subscribers to his daily, in addition to paying for newsroom costs.

“All of this will have a significant impact and help us weather the effects of the digital transition,” he said.

The NDP offered its support to the moves in Wednesday’s economic update, while calling for other changes regarding federal advertising.

“Right now the government spends most of its advertising dollars with web giants like Google and Facebook,” NDP Leader Jagmeet Singh said. “If they were to spend that money in local media, in media in Canada, that would be a better use of our public dollars.”

CWA Canada, which represents 6,000 workers in the media industry, is hoping the funding will restore journalistic presence in communities affected by the recent closure of dozens of news outlets.

“The loss of local journalists is a serious threat to our democracy,” CWA Canada president Martin O’Hanlon said. “It means fewer journalists reporting on the stories that matter to communities – and leaves almost no one to hold local politicians and powerful interests to account in many places.”

In its last budget, the federal government promised to support smaller, local news outlets in “underserved” communities, offering $10-million a year for five years to be distributed through one or many non-governmental organizations.

In Wednesday’s economic update, the government said the money would start flowing in 2019-20 to independent, non-profit organizations that create “open source news content” to be provided free of charge to local media organizations